Selling on eBay can offer a flexible path to self-employment, whether you’re flipping collectibles, managing a niche online store, or running a full-time resale operation. But as your income grows, so does the importance of planning for the future.
If you’re a self-employed eBay seller, a Solo 401k could be one way to set money aside for retirement while potentially lowering your taxable income. This guide explains who qualifies, how the plan works, and what to keep in mind before opening one.
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GET STARTEDSolo 401(k) eligibility and contribution limits depend on IRS rules. Carry does not provide tax advice, consult a tax advisor. Carry Advisors LLC, an SEC-registered investment adviser, provides investment advisory services for discretionary and non-discretionary accounts (e.g., Solo 401(k), IRA, taxable brokerage accounts). Bank and trust accounts are not advised by Carry Advisors. Brokerage accounts are introduced by Global Carry LLC and carried by DriveWealth LLC, both members FINRA/SIPC. Advisory fees may apply and additional disclosures are described in our Form ADV and CRS.
Can You Qualify for a Solo 401k as an eBay Seller?
Yes. If you earn self-employment income from your eBay store and do not employ any full-time staff, you may be eligible for a Solo 401k.
This type of plan (also called a one-participant 401k) is specifically designed for self-employed individuals and owner-only businesses. It functions much like a traditional 401k but is built for people who run their own business without employees.
📝 Note: If you eventually hire a full-time employee (defined as someone who works at least 1,000 hours in a year), your plan may no longer qualify as a Solo 401k and will need to be updated to meet additional IRS requirements.
Basic Solo 401k Requirements for eBay Sellers
To open a Solo 401k as an eBay seller, here’s what you need to meet:
✅ Earn Self-Employment Income
You must have business income from eBay sales, such as selling vintage items, retail arbitrage, or managing your own resale inventory. Sole proprietors usually report this income on Schedule C. If you operate under an S corporation, your income would typically come from W-2 wages paid to yourself.
✅ No Full-Time Staff (Other Than a Spouse)
Solo 401ks are only allowed if your business does not employ full-time workers, unless the employee is your spouse. If you hire full-time help in the future, you may need to switch to a different type of retirement plan.
✅ Acceptable Business Structure
You can operate as a sole proprietor, LLC, S corp, or partnership. As long as you meet the self-employment and no full-time employee criteria, your entity type won’t prevent you from starting a Solo 401k.
✅ Spouse Participation Option
If your spouse works with you in the business and receives compensation, they can also contribute to the Solo 401k. This can significantly boost your combined household contributions.
📌 Also Read: Important Forms for Solo 401k Owners
Why eBay Sellers Might Choose a Solo 401k
As a solo business owner, a Solo 401k can give you control over your retirement savings and possibly some tax savings too. Here’s what makes the plan worth considering:
1. Higher Contribution Possibilities
You can contribute as both employee and employer. That means you may be able to set aside more each year compared to other retirement accounts. In 2025, the combined limit is $70,000, with additional catch-up contributions allowed if you’re 50 or older.
📝 Note: Your contribution limit depends on your net self-employment income after accounting for self-employment tax and prior contributions.
2. Choice Between Pre-Tax and Roth
Solo 401ks support both Traditional and Roth contributions:
- Traditional: Lowers your taxable income now. You’ll pay tax later when you withdraw in retirement.
- Roth: Funded with after-tax dollars. If you meet IRS conditions, withdrawals may be tax-free later.
📝 Note: The right option depends on your current income and your expectations for future tax rates.
3. Flexible Investment Options
Many Solo 401k providers offer a wide selection of investments, including mutual funds, ETFs, stocks, and bonds. Some even allow for alternative investments depending on the custodian.
📝 Note: Always ensure investments follow IRS rules to avoid disqualifying the plan.
4. Spouse Participation
If your spouse contributes to the eBay business and earns compensation, they can also participate in the plan. This can help you reach higher combined annual contribution limits.
📝 Note: Once your plan grows past $250,000 in total assets, you’ll need to file IRS Form 5500-EZ every year.
📌 Also Read: How to Add Your Spouse to Your Solo 401k Plan
2025 Solo 401k Contribution Limits
Here’s what the IRS allows for Solo 401k contributions in 2025—numbers that could make a real difference for self-employed sellers:
Employee Contribution Limit
You may contribute up to $23,500 from your own income. If you’re 50 or older, you can add another $7,500 as a catch-up contribution for a total of $31,000.
Employer Contribution Limit
As the business owner, you may contribute up to 25 percent of your compensation:
- Based on net earnings for sole proprietors
- Based on W-2 wages for S corp owners
Combined Contribution Limit
Total contributions (employee + employer) are capped at $70,000 for 2025. If you’re 50 or older, this increases to $77,500 with catch-up contributions.
📝 Note: The actual amount you can contribute depends on your business structure and total income. Refer to IRS guidelines or work with a professional to calculate your limits accurately.
Should eBay Sellers Consider a Solo 401k?
If you’re running your eBay business full-time (or even as a side hustle) and don’t have full-time employees, a Solo 401k may offer a smart way to build retirement savings while lowering your taxable income. It’s flexible, tax-efficient, and relatively easy to maintain.
What to watch out for:
- Plan becomes ineligible if you hire full-time staff
- IRS filing required if plan exceeds $250,000
- Requires accurate recordkeeping and compliance
As with any retirement strategy, it’s a good idea to assess your income and goals or speak with a qualified advisor to decide if a Solo 401k is the right move for your business.
📌 Also Read: How to Open a 401k Without An Employer
Disclaimer:
The Carry Learning Center is operated by The Vibes Company Inc. (“Vibes”) and contains generalized educational content about personal finance topics. While Vibes provides educational content and technology services, all investment advisory services discussed on this website are provided exclusively through its wholly-owned subsidiary, Carry Advisors LLC (“Carry Advisors”), an SEC registered investment adviser. The information contained on the Carry Learning Center should not be construed as personalized investment advice and should not be considered as a solicitation to buy or sell any security or engage in a particular investment, accounting, tax or legal strategy. Vibes is not providing tax, legal, accounting, or investment advice. You should consult with qualified tax, legal, accounting, and investment professionals regarding your specific situation.
The accounts, strategies and/or investments discussed in this material may not be suitable for all investors. All investments involve the risk of loss, and past performance does not guarantee future results. Investment growth or profit is never a guarantee. All statements and opinions included on the Carry Learning Center are intended to be current as of the date of publication but are subject to change without notice.
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